California Treasurer Bill Lockyer may order two giant state pension funds to strip their portfolios of any investments in gun makers after the shooting rampage at an elementary school in Connecticut.

He has asked that both the California State Teachers' Retirement System and the California Public Employees' Retirement System, the nation's two biggest pension funds, provide an accounting of all such holdings. Lockyer is particularly concerned about investments in the makers of certain military-style assault weapons, which are banned in the state.

"The bottom line is neither PERS nor STRS should have any investments in the makers of guns that are illegal in California, especially when those guns have been used to kill 20 innocent children and six innocent adults," Lockyer said.

The request comes after CalSTRS said it would review its investment in Cerberus Capital Management, a private-equity giant that owns the maker of Bushmaster Firearms International. The company makes the Bushmaster AR-15 rifle, the weapon used in last week's Connecticut school shootings.

Like Bushmaster, many other firearms brands — including Browning, Winchester, Colt and Beretta — are privately owned. Big institutional investors like pension funds might indirectly own pieces of these companies with investments in money managers or hedge funds.

The possibility of big public pension funds dumping the stock of gun and ammunition makers was also felt on Wall Street.

Investors also sold off shares of publicly traded firearms makers amid speculation the government will enact tougher new gun restrictions after the elementary school shooting.

Smith & Wesson Holding Corp., considered the largest handgun manufacturer in the U.S., led the decline. Its shares tumbled 48 cents, or 5.2%, to $8.65 a share Monday after slumping more than 4% following the shooting at Sandy Hook Elementary School on Friday.

Sturm Ruger & Co., another firearms maker, slid $1.57, or 3.5%, to $44 a share Monday after diving more than 4% Friday. Ammunition company Olin Corp., however, rose 10 cents, or 0.5% to $21.54 a share.

"Every time one of these tragic events occurs, there's certainly a flurry of discussion over whether or not the government may tighten gun-control legislation," said Rommel Dionisio, a Wedbush Securities analyst in New York. Last week's slayings may be viewed differently because of "the use of what can be considered an assault rifle and certainly the number of children, and the fact that it was very young children."

President Obama "intends to get the ball rolling," said Dionisio, who rates Smith & Wesson stock neutral. Already, several senators are pledging to bring tough new gun control initiatives to Congress.

Until Friday's assault, the gun industry was riding an upswing. As manufacturers rolled out new innovations, sales of firearms have enjoyed double-digit growth since 2006, according to Benchmark Research. Since 2009, Sturm Ruger stock has soared more than 600%.

In the last four years, Smith & Wesson's share price has tripled. Its second-quarter revenue surged 48% this year. The company also reported seeing more female gun enthusiasts and a Black Friday boost.

In a note to investors this month, analysts from Cowen & Co. said they expect "very solid near-term gun demand," citing holiday season incentives to buy firearms and uncertainty over the "fiscal cliff."

But investors are now taking a more pessimistic look at the firearms market as politicians advocate stiffer weapons-related rules.

U.S. Sen. Dianne Feinstein (D-Calif.) promised to introduce legislation at the start of next year's congressional session. On Monday, New York Mayor Michael R. Bloomberg called for tighter gun laws.

In a speech in Newtown, Conn., where the shooting occurred, Obama said he would use "whatever power" he has to prevent future massacres after previously taking a more ambiguous stance on the topic.

Some local security companies said they are already getting more calls from school districts that want more protection.

At American Force Private Security Inc. in San Bernardino, operations manager Sam Gal said he has received three calls requesting security guards at local schools. In the past, such calls have come in once every three months, he said.

"Everyone's afraid because of what happened in Connecticut," he said.

Skittish school districts have also called USA Alarms Systems in Monrovia, said Chief Executive George Gunning. The company's sales representatives are also reaching out to existing customers to offer upgrades.

"I think they're looking to improve security systems and make sure they are up to par," he said. "There's no sense waiting for something to happen."